When Kham Dinh Do, a wealthy importer and landowner, fled war-ravaged Saigon in 1975, he came to Washington and opened a small jewelry store on 14th Street NW, near the heart of the city's pornography district.

"Business was not good," said Do, so eight months ago he and his wife packed up their delicate gold filigree jewelry and moved their shop across the Potomac River to Clarendon, a triangular wedge of North Arlington bounded by Wilson and Washington boulevards and North Highland Street.

"Here," said Do, "business is so-so, but I feel at home among my countrymen."

Do is one of more than a dozen Vietnamese who have set up shop in Clarendon, turning a retailing center once known as "Northern Virginia's downtown" into an area often referred to now by Americans as "Little Saigon," the "Mekong Delta" or even the "Ho Chi Minh Trail."

In vivid contrast to their established neighbors, the Vietnamese shops are an island of sights, scents and language unfamiliar to most Americans -- except GIs and journalists who once knew Vietnam.

After 20 years as a bustling neighborhood crowded with mom-and-pop stores that reflected Arlington's nearly all-white bedroom-community character, Clarendon has become one of the largest Indochinese commercial centers on the East Coast.

Although estimates of the refugee population in the metropolitan area vary from 9,000 to 20,000, Washington is thought to have the third-largest concentration of Indochinese in the country after California and Texas.

Most of the refugees -- an estimated 5,000 -- have settled in Arlington, attracted by its proximity to Washington and its stock of moderate-cost garden apartments.

The transition of Clarendon into a street scene with store names like Dat Hung Jewelry and Mekong Center has stirred resentment among some Northern Virginians.

"There's definitely a resentment among some of the older Arlingtonians," said Ron Sidle, owner of the Quality Men's Shop, Clarendon's first store, established in 1930. "Some of my customers say things about the Vietnamese similar to what I heard them say 20 years ago about the Jews, things like, 'They don't belong in Arlington.'"

Despite the resentment, what has happened in Arlington mirrors a national trend, according to Thomas C. Parker, deputy county planning director.

"The same thing happened in Miami when the Cuban refugees came in," Parker said. "They moved into a dying commercial area like Clarendon after a lot of established white businessmen had moved out."

In 1975 when the Vietnamese began opening shops, Parker noted, Clarendon already had been eclipsed by regional shopping malls like Tysons Corner and severely disrupted by subway construction. Business was so bad that more than 90 of an estimated 200 stores had closed.

"There was a vacuum there," Parker said. "The Vietnamese just took advantage of cheap rents and the vacant space. People were happy to rent those stores then." The Vietnamese were one alternative to "boarded-up stores."

"When we came here this area was completely dying," agreed the woman who opened Saigon Market, the first Vietnamese business in Clarendon in 1972. "They couldn't rent this store for nearly two years."

A tiny, youthful-looking 40-year-old Vietnamese who came to Washington in 1968, she asked that her name not be used because she fears reprisals against relatives still in Vietnam. She recalled that Vietnamese shops began springing up shortly after the fall of Saigon in 1975.

"Suddently we had lots of company," she said, as she chatted in Vietnamese with an Indochinese woman who was buying rice and watercress. The Ta Lun Umbrella Shop replaced Guernsey Office Products, she recalled. A Lerner's Womens Shop became the Pacific Oriental Department Store. Sampson's Dress Shop is now the site of Vietnam Tailor.

Exotic Oriental products such as bolts of brightly colored silk used to make ao dais, long Vietnamese dresses, packages of rice paper and fish sauce -- a product the Vietnamese use the way Americans use salt and pepper -- line the shelves of what were once shoe shops and hardware and toy stores.

Store signs and business cards are printed in both Vietnamese and English, but American customers -- except those married to Vietnamese -- are few. Flyers and posters tacked on the walls to announce festivals or community news are printed in Vietnamese.

American cigarettes, soft drinks and sunglasses -- once popular on the Saigon black market -- are among the only recognizable "foreign" products in small groceries that carry black fungus and fish sauce the Vietnamese can't buy in Giant or Safeway.

"The stores here are just like many in Saigon," she observed. Her regular customers come from Springfield and Silver Spring as well as Arlington. On long holiday weekends, Indochinese families drive to Clarendon from as far away as Kentucky and Pennsylvania. Richmond and Baltimore customers appear often.

"Shopping in Clarendon is almost secondary," said Nguyen Ngoc Bich, a Vietnamese community organizer. "Vietnamese from all over the area go to Clarendon, especially on Saturday. They buy a Vietnamese magazine and stand around inside the stores, meeting and talking to friends, hearing news about Vietnam, gossip about people they know."

Nguyen, Van Hoan is the owner of the Pacific Oriental Department Store one of the largest and most prosperous businesses in Clarendon. In 1978, the first year the store was opened, Hoan said the store sole $1 million worth of merchandise.

"Like all Orientals the Vietnamese like to stay together, because living in America they feel isolated," said Hoan, who came to the United States in 1969 and has a business degree from Vanderbilt University in Nashville. "Coming to Clarendon makes them feel less lonely."

Many Clarendon merchants, Hoan included, come from affluent, if not wealthy, white-collar backgrounds.

Several of those interviewed said they were able to raise the initial $5,000 to $10,000 necessary to start a small business because they managed to smuggle cash or jewelry out of Vietnam. Others, the woman who owns Saigon Market, who came to the United States 11 years ago as a secretary for the South Vietnamese Embassy, for instance, were in America when Saigon fell or like jewelry store owner Do had children who were attending American universities.

The privileged backgounds of some Vietnamese merchants arouse resentment among some American business people, who see their own businesses floundering as the refugees continue to open shops.

"I see two sides of it," said Peg Codolly, the owner of Clarendon Hairstyles across Wilson Boulevard from a string of Vietnamese shops. "When I saw the boat people on '60 Minutes' the tears rolled down.But now it seems like everytime you turn around there's a new [Vietnamese] store here. They come here with all this money and that's why they can start all these businesses in Clarendon."

"It seems that the Americans don't like us," said the owner of Saigon Market, "but we are very hard workiers. My husband and I worked very hard to save the $10,000 to open our store and we borrowed from friends.

"Vietnamese live the way an Asian country lives," she said. "We live [frugally] and can save money more easily than Americans." Many Vietnamese shopkeepers, including this woman, say they can reduce costs associated with store operations because they employ only family members.

"Business is good enough to make a living on," she said, echoing other merchants who say they earn enough to support their families. "We take in about $16,000 per month, but after all the expenses we have only about $1,200 left."

"These are Mom and Pop operations, as are most Vietnamese businesses," said Hoan. "I've never heard of a Vietnamese firm going bankrupt here. The Vietnamese are very cautious."

One expression of that caution, say American merchants, is part of the gulf that divides the Vietnamese and American business communities in Clarendon. The result, both groups say, is an uneasy truce replete with mutual misunderstandings.

"The Vietnamese don't shop in our stores," said Quality Men's Shop owner Sidle. "Where they buy their clothes -- whether it's K-Mart or Britches -- I don't know. I even bought suits in their sizes -- 35 and 36 short -- but they wouldn't buy them, even on sale."

"Once I asked a Vietnamese businessman here to recommend someone I could hire as a salesclerk," Sidle recalled. "He thought about it for a while and then he said no, he couldn't recommend anyone." If he did and the person didn't work out, Sidle said the Vietnamese seemed to say, he would lose face.

Hoan, who is treasurer and the only Vietnamese member of the fledgling Clarendon Business Association, said he is trying to convince reluctant Vietnamese merchants to join the 70-member association to forge a link between the two cultures.

"Many of them say they don't want to join," said Hoan, who believes that some of the mistrust stems from the language barrier. "They say they feel they don't belong here or that the association won't do them much good."

Both groups do agree that business in Clarendon may be greatly affected by another newcomer: Metro.

The Clarendon subway stop is scheduled to open Dec. 1 as part of the expansion of the Orange Line.While American merchants say they hope the subway will boost lagging sales, some Vietnamese say they fear they will be forced out.

"There is a fear among many Vietnamese that with Metro moving out here stores will become more valuable and the Vietnamese will be forced out through rent hikes or tougher enforcement of health codes," Bich, the community organizer, said.

County planners note that rents in Clarendon currently average about $2 per square foot, compared with prices of $12 to $20 per square foot in Rosslyn, the financially successful highrise office development less than two miles south.

Already there are signs of redevelopment in Clarendon. An empty Kimmel's Furniture Warehouse two blocks from the subway has been refurbished recently, and several businesses, including a brokerage firm, have moved in.

Hoan, who has a 15-year lease on his store, said his landlord told him recently of a $2 million offer to buy the Pacific Oriental site, which faces the subway station. Two years ago, Hoan said, when his landlord tried to sell the building for $700,000 no one was interested.

"The impact of Metro is a great unknown," said deputy planning director Parker. "It's only one of five subway stations along that line and it's going to be competing against the regional malls. No one really knows what impact the subway will have."

Parker pointed out that current county policy calls for high-rise development to be concentrated around subway stations.

"Many Vietnamese are wondering what will happen," said Bich. "We feel we moved into an unwanted area in the first place, but now that Metro is coming and we're a bit successful we hear that there are too many Vietnamese businesses here."